I’ve bought Daejan (LSE:DJAN) for my modified price earnings ratio portfolio. It has two outstanding virtues. First its shares, at my buying price of £52.90, are merely seven times earnings per share when EPS is averaged over the last decade. Second, its net assets are worth £120 per share, thus it stands on a discount to net assets of 56% (no, it does not have high borrowing). Daejan holds residential blocks and commercial property in London, New York and elsewhere in the UK and USA, and rents them out. Occasionally there are opportunites to develop properties to enhance value, e.g. it holds a block on Oxford Street which it is going to redevelop soon. Mr Market seems convinced that there will be a recession in the UK and USA of such ferocity that rents are going to fall dramatically and property market values halve.
Well, maybe. In the early 1990s recession – which was pretty nasty - Daejan’s portfolio valuation fell by no more than 10% ... If you want to read more of this article or more articles follow my newsletter here.
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Glen ArnoldI'm a full-time investor running my portfolio. I invest other people's money into the same shares I hold under the Managed Portfolio Service at Henry Spain. Each of my client's individual accounts is invested in roughly the same proportions as my "Model Portfolio" for which we charge 1.2% + VAT per year. If you would like to join us contact Jackie.Tran@henryspain.co.uk investing is about making the right decisions, not many decisions.
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